* * * 19991020 Wednesday

For educational purposes only ...

-------------------------------------------------------------- This story was printed from ZDNN, located at http://www.zdnet.com/zdnn. -------------------------------------------------------------- Modem tax myth may be for real By Brock N. Meeks, MSNBC October 19, 1999 7:57 AM PT URL: http://www.zdnet.com/zdnn/stories/news/0,4586,2376030,00.html

The Federal Communications Commission this year will re-examine the issue of whether Internet service providers should pay a per-minute fee for connecting to the local telephone network, said a commission official speaking here at the annual convention of the United States Telecom Association.

The issue of ISPs having to pay an access fee, infamously known as the "modem tax" in Internet circles, is all too familiar to anyone who has had a modem for longer than a week. Apparently the first "urgent alert!" new modem owners stumble upon is a text file proclaiming that the FCC is about to impose a per-minute "tax" for online time.

The "modem tax" is now officially classified as an urban myth; however, the idea is not completely dead inside the FCC; it's just on long-term hold.

Because ISP customers connect to the Internet by using local telephone lines, the telephone companies have, for more than 10 years, complained that ISPs should pay "access fees" for using their networks. Local phone companies complain because modem users often tie up capacity for hours at a time and argue that they should be compensated.

Time to end exemption? The idea has precedent. Long-distance companies pay a portion of their long-distance rates to local telephone companies for the privilege of completing the calls.

Of course, any access fees imposed on ISPs would likely equate to an increase in rates for consumers as ISPs would pass the increases on to their customers in the form of higher monthly rates, hence the genesis of the term "modem tax."

Years ago when modems first began gaining popularity -- long before there was a World Wide Web -- the FCC considered, then rejected, the idea of placing a per-minute fee on all modem connections. Access, at that time, was estimated to have a cost of about 10 cents per minute.

The FCC granted the online industry an exemption from the access fees, claiming it would kill the nascent data industry. The exemption has been reconfirmed several times over the years.

But the telephone companies won't let the idea die and from time to time lobby the FCC to lift the exemption.

"Obviously, the FCC is dealing with this issue this year," said Rebecca Beyon, legal adviser to FCC Commissioner Harold Furchtgott-Roth.

Part of the quandary facing the FCC, Beyon said, is that it's difficult to say how an ISP should be charged. "There's no way to tell when someone is calling an ISP," Beyon said, as opposed to someone making a voice call. She said it might be possible to write some regulations that would track such ISP calls.

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"As of now, the exemption stands," said Robert Atkinson, the FCC's deputy chief of the Common Carrier Bureau.

Back when access rates were 10 cents a minute, the additional fees were simply too high for data services to pay, Atkinson said. "As we get to a cost-based regime, we can re-examine the access charge," he said.

One solution might be to impose a "flat rate" access fee on ISPs, Beyon said, noting that her boss, Furchtgott-Roth, "is intrigued by the idea."

-- Robert Mangus (rmangus@hotmail.com), October 20, 1999

Answers

No end to 'public servant' greed, eh? I just hope and pray that the world is in a condition next year in which this is a valid issue to debate.

MFU

-- Man From Uncle 1999 (mfu1999@hotmail.com), October 20, 1999.

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MFU: Agreed!

On the other hand, my ISP is NetZero--FREE, UNLIMITED CONNECT TIME!

They'd probably wind up raising advertising rates to their patrons.

Regards, Bob Mangus

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-- Robert Mangus (rmangus1@yahoo.com), October 20, 1999.

Furchtgott-Roth is a moron, who infuriated mass quantities of netizens last year when he gave a decidedly *pro* spam speech, presenting the vile practice as something akin to the backbone of bootstrap level commerce. IIRC, he waxed orgasmic on his experiences as a door to door salesman, and praised spam as something just as lovely, and *necessary* for the Internet.

The jerk has *zero* credibility.

-- Ron Schwarz (rs@clubvb.com.delete.this), October 20, 1999.